With an increasing number of Scottish businesses operating across international borders, Finance Directors and Heads of Tax need to critically appraise their structures in preparation for imminent tax changes being rolled out by the Organisation for Economic Co-operation and Development (OECD).

BEPS, or the Base Erosion and Profit Shifting Action plan, is billed as a ‘paradigm shift’ to address the strategies used by some multinational businesses to reduce their corporation tax bills and is being supported by the G20 group of countries.

However, its principals could spell significant changes in how all companies report and pay taxes, not just the largest groups.

The coming months will prove difficult as countries roll out these changes and timelines are confirmed - the UK, for example, has already begun implementing these.

Finance directors and the heads of tax of multinationals are used to dealing with complex new reporting requirements.

Navigating rules and laws is second nature but never has the issue of tax been so relevant and such a priority.

The lack of internationally coordinated ruling, as opposed to any one country’s own tax laws, is how the likes of Starbucks paid zero corporation tax on £400m of UK sales.

According to the OECD, it has been estimated that tax minimising practices amount to losses between $100bn (£66bn) and $240bn (£158bn) in tax annually.

That’s 4%-10% of global corporate tax revenues.

Since then tax avoidance quickly escalated to the highest political level.

In a joint statement in 2013, George Osborne and German Finance Minister Wolfgang Shaüble, put corporate tax avoidance on the global agenda prompting the OECD report.

Now that tax has unwittingly made its way to the top of the agenda for boards of multinational companies worldwide, we must consider the Action Plan’s impact on Scottish business and what we can do to prepare for it.

The ripple effect will be felt by Scottish business, large or small, and it is imperative we prepare.

Scotland operates in an increasingly international marketplace. According to the Scottish Government, in 2013, Scotland exported £27.9bn worth of goods and services abroad.

This is only set to increase as the government aims to increase Scottish exports by 50% by 2017.

However these benefits bring great challenges which include navigating political instability in developing economies, foreign currency fluctuations and now tax.

Though the recommendations of the OECD are targeted at large multinational companies, there are specific areas that will have significant bearing on Scottish companies.

The BEPS Action Plan recommends a restriction on interest deductions over a certain percentage of profits (between 10% and 30%) but they leave the exact ratios and implementation to national governments to decide.

Nevertheless, by effectively removing the arm’s length principle for financing, this action could be costly and have significant implications for your tax management.

We believe that interest rate deduction is one of the grey areas where tax teams should model the implications of different levels of deductions, and consider how to deal with the varying outcomes.

Country by Country Reporting (CbCR) is another significant focus in the Action Plan.

It states that companies with consolidated group revenue of at least Euro750m need to provide tax authorities with large amounts of data using a set format and this data will then be shared between the tax authorities.

CbCR will provide transparency into where profits, sales and taxes are paid and accrued to prevent aggressive transfer pricing.

The BEPS Action Plan indicates that some operational restructuring and adjustments to transfer pricing may be required by businesses.

But given the current uncertainty it would be beneficial to model the different outcomes and develop clear contingency plans rather than taking immediate action now.

Despite the report requiring much clarity in many areas, do not be complacent.

BEPS could be a minefield for the unwary.

The crackdown has begun and the ripples are felt far and wide affecting many businesses large or small.